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Monday, December 29, 2014

Year 2014: 5 events that shaped PSUs

WITH hardly a couple of days to go in the year 2014, here is a
quick look at the five events in the PSU sector this year. From SAIL's mega disinvestment to Coal India throwing life jackets to revive dying companies, those events have
significantly shaped the nature of the public sector undertakings in 2014. Here are the 5 events in PSU corridors:

Mega Disinvestment: SAILing Through

The biggest news of the year in public sector was undoubtedly the five
percent stake sale in Steel Authority of India (SAIL) by the government that received an
encouraging response from investors. The Rs 1,700-crore offer for
sale (OFS) was subscribed more than two times, while the portion reserved for
retail investors — investing up to Rs 2 lakh crore — was subscribed nearly three
times.

The success of the SAIL offering is likely to boost the confidence
of the government, which has set a record Rs 58,425-crore gross disinvestment
target for this financial year to help bridge its fiscal deficit. Life Insurance Corporation of India invested
as much as Rs 700 crore, about 40 per cent of the issue. Other prominent
investors included State Bank of India (Rs 150-200 crore), United India
Insurance (Rs 15 crore) and ICICI Bank (Rs 100 crore). The issue also saw
participation from Hong Kong-based fund Segantil Capital Management ($15
million) and New-York based Geosphere Capital Management ($5 million).Coal India's Life Jacket

Coal India Ltd (CIL) on December 23 said it is embarking
upon two joint-ventures to revive the Talcher coalfield in Odisha. The first
joint-venture will be formed between CIL and GAIL, both state-run companies for
coal gasification project and the second joint venture will be with Rashtriya
Chemicals and Fertilizers Ltd,, another state-run company.

End of an Iconic HMT Watch

An important decision that the Modi Sarkar took was shutting down of six
sick PSUs. A Cabinet note proposing the closure of
six firms under the department of heavy industry has been circulated. The list
includes Hindustan Photo Films, HMT Bearings, HMT Chinar Watches, Tungbhadra
Steel, Hindustan Cable and the iconic HMT Watches. There was a time when wedding gifts used to be HMT watches. In the second round, 15 more
loss-making firms could face a lock-up. Those include British India
Corporation, IDPL and their subsidiaries.OVL's New Zealand Trip

OVL, the overseas arm of state-owned oil and gas explorer
ONGC, has for the first time taken interest in New Zealand's oil and gas
exploration, a media report said on December 9.

New Zealand awarded 15 oil and gas exploration licences, with US giant Chevron and India's OVL
joining the hunt in the South Pacific country.

New Zealand energy and resources minister Simon Bridges said
it was the most successful round of block offers since the new system for
awarding oil and gas exploration territory was instituted in 2012. Representatives of the company and Indian High Commissioner
to New Zealand, Ravi Thakur, were present at the ceremony at the Beehive where
the permits were awarded.Banking on Stake Sale

A day after State Bank of India chairman Arundhati
Bhattacharya's statement on December 11 that the Cabinet’s decision to pare
stake in state-owned banks will lead to a fresh round of banking reforms, and
force these financial institutions to be more competitive, ratings agency Fitch on December 12
said the government's plans to reduce stakes in state-owned banks to 52 percent
by 2019 will enable these entities to exercise greater flexibility in raising
capital in the equity market.

Bhattacharya had said the government should allow public
sector banks (PSBs) to look at different alternatives to raise funds to meet
Basel-III norms, including issuing shares with differential voting rights. “The news that the government has allowed PSBs to bring down
govt stake to 52 per cent kicks off the next round of reforms because for the
first time there is a very clear signal that banks can pick up funds from the
market,” Bhattacharya said at the concluding day of the Delhi Economics
Conclave.